PhonePe receives Rs 586 Cr from its Singapore parent entity

Digital payments firm PhonePe has received $82.5 million (Rs 585.66 crore) from its Singapore-based parent PhonePe Private Ltd, as the competition within the space intensifies. According to a regulatory filing with the MCA, the board of directors passed a resolution to allot 1,381,278 equity shares to PhonePe's parent entity at Rs 4,230 each.

This is the third round of fund infusion in the company in the ongoing fiscal. Previously, it had raised Rs 405 crore and Rs 698 crore respectively in July and October in FY20. PhonePe has received a total $238 million from the Singapore-based parent entity during FY20 till now.

This comes just a few weeks after its competitor Paytm closed a round worth $1 billion. It also comes in the backdrop of PhonePe having been in talks to raise about $1 billion in external funding from the likes of Tencent.

However, the discussions seem to have been in limbo due to differences in valuation. This has been going on since its parent company Walmart gave a  nod to hive-off PhonePe from Flipkart. However, it looks like this hive off would take place after the external funding is finalized.

The digital payments landscape in India has been witnessing cut-throat competition with the top three players — Paytm, PhonePe and Google Pay — burning large amounts of capital to grab higher market share.

If PhonePe's external funding goes through at an expected valuation of $8-10 billion, it may get the tag of the second most valued company in digital payment space after Paytm, which was reportedly valued at around $18 billion during its recent fundraise.

In a separate regulatory filing in Singapore, PhonePe Private Limited had received $56 million from Flipkart Private Ltd in the last week of November. So far, the Singapore-based entity of Flipkart has infused $216.16 million (Rs 1,534 crore) in PhonePe Singapore this year across three rounds.

Till August this year, PhonePe used to lead the pack in the UPI ecosystem followed by Google Pay and Paytm. None of the three companies have given any fresh data around volume and value.

PhonePe’s losses ballooned during FY19, which is not surprising considering the high volume of cash backs and discounts. It had recorded a 2.4X jump in losses to Rs 1,907 crore in FY19 from Rs 791 crore in FY18. The company incurred an expense of Rs 1,296 crore alone on advertising and promotion. Meanwhile, its revenue also jumped 5X to Rs 245.8 crore in FY19 from Rs 49.03 crore in FY18.